Austria’s government bailed out Austrian Airlines with about half a billion dollars, even after its German parent obtained a $9.8 billion aid package. Part of Austria’s bailout includes moves to protect the airline from competition, under the guise of environmental responsibility.
Last summer Lufthansa’s CEO declared that only the wealthy should fly arguing that the cheapest flights offered by competitors are “economically, ecologically, and politically irresponsible.”
At the time I pointed out that the German flag matches low fares in the market so they can’t be too immoral and they were in the process of restructuring their own low cost carrier Eurowings.
Lufthansa wanted governments to ban low fares so they can charge customers more money. And all it took was a global pandemic to get there.
As part of the Austrian government’s bailout of Lufthansa subsidiary Austrian Airlines, there are two attacks on low cost carriers included that will protect Austrian from competition.
- Minimum ticket price on all bookings to or from Austria of 40 euros (US$45)
- New 12 euro (US$13.50) flight tax. Fixed taxes disproportionately hurt airlines charging low fares. $13.50 is a much higher percentage of $45 than it is of $135.
- The ticket tax will be €30 for flights under 350 km, to encourage use of rail rather than cheap flights.
During the regulated era in the U.S. the Civil Aeronautics Board set airlines prices. That was meant to prevent ‘ruinous competition’ that might hurt airline profits. Even during the last years of the CAB though they allowed ‘experiments in price competition’ and lower fares brought huge increases in flying.
The global pandemic has pushed many environmental concerns to the back burner, but the opportunities for airline subsidies and protectionism reunites the bootleggers and baptists, airlines and environmentalists seeking to raise airfares and impose higher taxes.